PHASING OF RENT INCREASES (Hansard, 22 July 1976)

§ The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)
I beg to move, That the clause be read a Second time.
The purpose of the new clause, the new schedule and the consequential amendments is to ensure that landlords and tenants of statutory tenancies created by the Bill are treated comparably as far as rent increases are concerned with landlords and tenants under tenancies to which the Rent Act 1968 applies. The proposed provisions contain a phasing regime akin to that already on the statute book. But they contain slight adaptations to fit in with the particular way in which Bill tenancies arise, and a certain amount of streamlining.
The clause and the schedule resemble closely Section 7 and Schedule 2 respectively of the Housing Rents and Subsidies Act 1975. Their aim is that increases in rent up to a newly registered level should be phased in up to three annual stages. The landlord, however, should be able to recover the cost of services which he provides and whose charges he cannot himself control. This is the regime which applies to the vast majority of Rent Act tenancies where a rent is registered. So it is consistent with our approach to this Bill as a whole that we should adopt it, subject of course to any modifications needed to meet the particular circumstances of the Bill.
It may be helpful if I outline the two modifications which we are suggesting. 2040 First, the Bill should be on all fours with the existing regime in so far as initial rent payable is concerned. There is no phasing, nor could there be any, towards the initial rent which a landlord is entitled to recover under a contractual tenancy protected by the 1968 Act. Phasing can only arise once a rent payable is to be replaced by a higher rent. But under the Bill, a statutory tenancy is unlikely to be preceded by a tenancy at all and certainly not by a tenancy in identical terms. Hence the initial rent relating to a Bill tenancy which a landlord is entitled to recover is the first rent registered during the currency of that tenancy. It would be a departure from the existing rules of phasing if the tenant were not liable to meet this first obligation in full. Hence, we have provided for phasing to take place only at the second and subsequent registrations of a rent under a tenancy created by the Bill.
Secondly, tenants protected under the 1968 Act may find that their rent increases are subject to phasing not under the Housing Rents and Subsidies Act 1975 but under the Housing Finance Act 1972. This happens in the minority of occasions where a newly registered rent has to take account of improvements which attract grant aid from the local authority. Application of a regime akin to that of the 1975 Act already entails writing into the Bill provisions of some complexity. The additional insertion of undoubted intricacies so as to cater for what is likely to be a far from significant minority of cases hardly seems justified in the Bill's context. So we have reached the conclusion that a streamlined regime is more likely to be workable and comprehensible—which is important to both farmers and farm workers alike. The clause and schedule are thus exclusively modelled on those introduced by the 1975 Act.
Amendments 87 and 158, which we are also discussing, are of lesser importance. Amendment No. 87—to Clause 14—covers what is likely to prove a very rare case: a dwelling-house subject to a statutory tenancy created by the Bill but with a rent registered at some time in the past, no doubt where a previous Rent Act tenant was somebody other than a farm worker. In such cases it would hardly be justifiable if the chance existence of a registration were to prevent a landlord 2041 from applying for a rent to be registered at the outset of a statutory tenancy created by the Bill. Amendment No. 87 so provides.
Amendment No. 158—to Schedule 7—covers another rare case—that of the tenant protected by the Bill who gives up his tenancy in exchange for a Rent Act protected tenancy of the same dwelling-house. The amendment provides that any rent increase in such unlikely circumstances is to be phased in accordance with the 1975 Act.

§ Mr. Daniel Awdry (Chippenham)
The clause indicates the great difficulties under which we are labouring this afternoon. We have only a few hours left to discuss more than 100 Government amendments, apart from our own. Sadly, this afternoon we have already lost a good deal of time because of the important statement by the Chancellor of the Exchequer—

§ Mr. Deputy Speaker (Sir Myer Galpern)
Mr. Speaker made it quite clear that any time lost because of the statement would be added at the end.

§ Mr. Awdry
That is true, Mr. Deputy Speaker, but I think it must be said that we are still very short of time. It is a scandalous state of affairs that this complicated Bill, which affects the lives and businesses of so many people, is not to be fully discussed. I feel bitter about this because we had a good set of discussions in Committee which were constructive, and we tried to make the Bill a better one.
The clause is complicated. Why was it not in the original Bill? That is a fair question because of the complication involved in these provisions. Was it an oversight by the Department, or have the Government had second thoughts about it? The House has not yet had an opportunity of discussing the amount of rent that will be payable when a statutory tenancy comes into effect. The amount of the provisional rent payable during the transitional period will be far too low. The provisional rents, which will often be less than £2 a week, are unfair to farmers, and we raised this matter in Committee.
Will the Minister confirm that the clause will not affect the fixing of rents 2042 by a rent officer in the first instance, so that the landlord will know that he will receive a fair return? I shall not ask the Minister to tell the House the meaning of the schedule in depth and detail. That would be unfair, since part of the new schedule reads: The permitted increase for a rental period which begins during the first year of the period of delay is an increase to the greater of the following amounts namely—

(a) PRL+SE+⅓ [RR-(PRL+SE)]:

(b) PRL+SE+SS".
I wonder what my farm workers will think of that. It is gobbledygood. Are the provisions in the new schedule, which we have not had time to discuss, similar to those in the schedule in the 1975 legislation? I do not want to delay proceedings, but the Minister must tell us why these complicated provisions were left out of the original Bill and he must confirm that they will not affect the fixing of the rent in the first instance.

§ Mr. Armstrong
The hon. Gentleman has been fair. It is a complicated matter, but it was considered necessary in order to make the situation clear to everyone. There is nothing new in the proposals. They make it clear to landlord and tenant that the provisions for the phasing of rent increases are akin to those that already apply to landlords and tenants under the Rent Acts. That is the reason for the new clause. I confirm that the provisions apply to subsequent rent increases.

§ Mr. Peter Mills (Devon, West)
The new clause shows a selective approach to this important matter. I do not altogether accept what the Minister said. He said that the matter was extremely complicated. More time should have been given to examining the provisions and to consulting our constituents about their effects. Has the Minister consulted the National Farmers Union about the clause?

§ Mr. Paul Hawkins (Norfolk, South-West)
I was not a member of the Committee, but the Government have shown a lack of consideration to hon. Members by rubber-stamping legislation without giving us the opportunity of consulting any of the interested organisations such as the NFU and the National Association of Agricultural Workers. The NFU brief does not mention the clause, 2043 although I am sure that it would have done if the NFU had been aware of it.
We have been treated by the Government in this way before in agricultural legislation. For example, when we were discussing an Agriculture (Miscellaneous Provisions) Bill a clause was introduced which tooks us weeks to examine and which had never before been mentioned. The same is happening now.
The provisions in the clause could create conflict between landlord and tenant and farmer and farm worker. I cannot believe that a schedule like this will add to the harmony In the countryside which we all want to maintain and which the Government appear to be endeavouring to destroy.

§ Mr. Geraint Howells (Cardigan)
I wish to express the same sentiments as other hon. Members. Have the Government discussed the provisions with Welsh agricultural organisations, such as the Farmers Union of Wales?

§ Mr. Armstrong
I find it difficult to understand why hon. Members should feel that in some way the agricultural worker and the industry itself are so isolated from the rest of the community. There is nothing new in the proposals and no new principles are being introduced. The provisions simply establish the proper relationship between landlord and tenant in the agricultural industry in a way which is taken for granted in other rent legislation. [HON. MEMBERS: "Rubbish."] It is no good shouting "Rubbish". The clause deals with the phasing of rent increases to bring that practice into line with provisions in Rent Act legislation.
I certainly did not consult the NFU or the NAAW about this matter and nor did discuss it with the Welsh farmers, because the clause is a genuine attempt by the Government to explain the relationship with other Rent Act legislation. We are not bringing in new proposals.